In case it’s not obvious…
WASHINGTON (AP) – Extra-low borrowing costs are likely to stick around through most of the year as the anemic jobs market restrains the Federal Reserve from raising short-term interest rates.
That was the view expressed by a growing number of private economists after Fed Chairman Alan Greenspan and his colleagues said Tuesday they can be “patient” in ordering rate increases. Fed policy-makers said that “new hiring has lagged” even though the economy is growing solidly.
The Fed’s latest thoughts on the economy came as policy-makers held the federal funds rate steady at a 45-year low of 1 percent, where it has been since June. The funds rate is the interest that banks charge each other on overnight loans and is the Fed’s primary tool for influencing economic activity.
“Don’t expect the Fed to raise rates anytime before the election unless we get an unexpected multi-month pop in payrolls and a rise in inflation,” said Sherry Cooper, chief economist at BMO Nesbitt Burns. “Even a rate hike in November or December seems to be a long shot now.”Interest rates on fixed rate mortgages are in the low 5% range, while ARM’s are in the 3% range. I’m getting my rate locked today.